The rue of net present value . Introduction: Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders. Net Present Value: Net present value: is the difference between the market value of investment and the cost of the investment.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 9, Problem 9.1CTF

Summary Introduction

To determine: The rue of net present value.

Introduction:

Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders.

Net Present Value:

Net present value: is the difference between the market value of investment and the cost of the investment.

Expert Solution & Answer

Answer to Problem 9.1CTF

As per the rule of NPV, a project can be accepted if its NPV is positive.

Explanation of Solution

The rule of net present value is as follows:

If the computed net present value is positive, then the investment must be accepted.
If the computed net present value is negative, then the investment must be rejected.

Hence, a project can be accepted if its NPV is positive.

Conclusion

The computation of net present value is used to assess the investment, which, in turn, is utilized to identify the profitability in a proposed investment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

One year ago, the Jenkins Family Fun Center deposited $3,700 into an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $5,500 to this account. They plan on making a final deposit of $7,700 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a rate of return of 9 percent?

It is anticipated that Pinnaclewalk will next pay an annual dividend of $2.2 per share in one year. The firm's cost of equity is 19.2% and its anticipated growth rate is 3.1%. There are 420000 outstanding. Use the Gordon Growth Model to price Pinnaclewalk's shares. {Express your answer in dollars and cents} What is Pinnaclewalk's market capitalization? {Express your answer in millions of dollars rounded to two decimal places}

Thumbtack's capital structure is shown in table below. If taxes are paid annually and Thumbtack's combined tax rate is 36 percent, determine the weighted average cost of capital Loans Bonds 12%/yr/semi $3,000,000 8%/yr/qtr $4,500,000 Common Stock $72/share price; $2,000,000 $8/shr/yr dividend; Retained Earnings (Answer should be in %) 1%/yr share price growth $1,500,000

Answer 2

Question

Chapter 9, Problem 9.1CTF

Summary Introduction

To determine: The rue of net present value.

Introduction:

Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders.

Net Present Value:

Net present value: is the difference between the market value of investment and the cost of the investment.

Expert Solution & Answer

Answer to Problem 9.1CTF

As per the rule of NPV, a project can be accepted if its NPV is positive.

Explanation of Solution

The rule of net present value is as follows:

If the computed net present value is positive, then the investment must be accepted.
If the computed net present value is negative, then the investment must be rejected.

Hence, a project can be accepted if its NPV is positive.

Conclusion

The computation of net present value is used to assess the investment, which, in turn, is utilized to identify the profitability in a proposed investment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 9, Problem 9.1CTF

Summary Introduction

To determine: The rue of net present value.

Introduction:

Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders.

Net Present Value:

Net present value: is the difference between the market value of investment and the cost of the investment.

Expert Solution & Answer

Answer to Problem 9.1CTF

As per the rule of NPV, a project can be accepted if its NPV is positive.

Explanation of Solution

The rule of net present value is as follows:

If the computed net present value is positive, then the investment must be accepted.
If the computed net present value is negative, then the investment must be rejected.

Hence, a project can be accepted if its NPV is positive.

Conclusion

The computation of net present value is used to assess the investment, which, in turn, is utilized to identify the profitability in a proposed investment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 9, Problem 9.1CTF

Summary Introduction

To determine: The rue of net present value.

Introduction:

Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders.

Net Present Value:

Net present value: is the difference between the market value of investment and the cost of the investment.

Expert Solution & Answer

Answer to Problem 9.1CTF

As per the rule of NPV, a project can be accepted if its NPV is positive.

Explanation of Solution

The rule of net present value is as follows:

If the computed net present value is positive, then the investment must be accepted.
If the computed net present value is negative, then the investment must be rejected.

Hence, a project can be accepted if its NPV is positive.

Conclusion

The computation of net present value is used to assess the investment, which, in turn, is utilized to identify the profitability in a proposed investment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 9.1CTF

Summary Introduction

To determine: The rue of net present value.

Introduction:

Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders.

Net Present Value:

Net present value: is the difference between the market value of investment and the cost of the investment.

Expert Solution & Answer

Answer to Problem 9.1CTF

As per the rule of NPV, a project can be accepted if its NPV is positive.

Explanation of Solution

The rule of net present value is as follows:

If the computed net present value is positive, then the investment must be accepted.
If the computed net present value is negative, then the investment must be rejected.

Hence, a project can be accepted if its NPV is positive.

Conclusion

The computation of net present value is used to assess the investment, which, in turn, is utilized to identify the profitability in a proposed investment.

Answer 6

Chapter 9, Problem 9.1CTF

Summary Introduction

To determine: The rue of net present value.

Introduction:

Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders.

Net Present Value:

Net present value: is the difference between the market value of investment and the cost of the investment.

Expert Solution & Answer

Answer to Problem 9.1CTF

As per the rule of NPV, a project can be accepted if its NPV is positive.

Explanation of Solution

The rule of net present value is as follows:

If the computed net present value is positive, then the investment must be accepted.
If the computed net present value is negative, then the investment must be rejected.

Hence, a project can be accepted if its NPV is positive.

Conclusion

The computation of net present value is used to assess the investment, which, in turn, is utilized to identify the profitability in a proposed investment.

Answer 7

Chapter 9, Problem 9.1CTF

Summary Introduction

To determine: The rue of net present value.

Introduction:

Capital budgeting is the procedure of allocating money to projects that are worthy. The main aim is to increase the wealth of the shareholders.

Net Present Value:

Net present value: is the difference between the market value of investment and the cost of the investment.

Answer 8

Expert Solution & Answer

Answer to Problem 9.1CTF

As per the rule of NPV, a project can be accepted if its NPV is positive.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The rule of net present value is as follows:

If the computed net present value is positive, then the investment must be accepted.
If the computed net present value is negative, then the investment must be rejected.

Hence, a project can be accepted if its NPV is positive.

Answer 12

Conclusion

The computation of net present value is used to assess the investment, which, in turn, is utilized to identify the profitability in a proposed investment.

Answer 13

Ch. 9.1 - Prob. 9.1ACQ Ch. 9.1 - Prob. 9.1BCQ Ch. 9.2 - Prob. 9.2ACQ Ch. 9.2 - Why do we say that the payback period is, in a...Ch. 9.3 - Prob. 9.3ACQ Ch. 9.3 - What advantage(s) does the discounted payback have...Ch. 9.4 - What is an average accounting rate of return...Ch. 9.4 - What are the weaknesses of the AAR rule?Ch. 9.5 - Prob. 9.5ACQ Ch. 9.5 - Is it generally true that an advantage of the IRR...

Answer to Problem 9.1CTF

Explanation of Solution

Want to see more full solutions like this?

Chapter 9 Solutions